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What else can you invest in on the share market?

The share market allows investors to not only buy and sell shares in companies, but also a range of other investments.

These investments are traded on markets, and can be bought and sold in a similar way to shares.

  • Australian government bonds
  • Property trusts
  • Managed funds
  • Commodities
  • Derivatives

Interest rate securities

Interest rate securities pay a defined income stream to investors. They can range from relatively simple and safe (such as Australian government bonds), to more complex and risky (such as convertible notes). Interest rate securities have a defined maturity date, at which point the issuer commits to returning the face value of the investment in cash (in the case of bonds), or in shares (in the case of convertible notes).

Examples of interest securities can include:

  • Australian government bonds
  • Corporate bonds
  • Preference shares (hybrids)
  • Convertible notes

Property trusts

Property trusts pool investors' funds (often billions of dollars' worth), and use those funds to purchase real estate. Many property trusts specialise in particular sectors, such as commercial, office or industrial property. They give investors access to property sectors and investments that would otherwise be well beyond their reach.

Managed funds

Managed funds pool investors' money, and follow a defined investment strategy. They can be 'actively managed' (where the fund manager makes the investment decisions), or designed to track the performance of a particular market or index. Managed funds can provide diversification and exposure to overseas or specialist markets that investors may not otherwise have access to.

Derivatives

Warrants

Warrants are financial instruments that derive their value from an underlying instrument, such as a share, a market index, a currency or commodity. They typically give the holder the right to buy or sell the underlying instrument, or receive a cash payment in lieu of the underlying investment, at a particular time.

Options

Exchange Traded Options (ETOs) give an investor the right - but not the obligation - to buy or sell an underlying asset at or up to a specific point in the future. ETOs can be used by traders to profit from market movements, for risk management (hedging), or to generate income.

Futures

A futures contract is an obligation (not an option) to buy or sell an underlying asset at a specific point in the future. Futures can be traded over a range of underlying markets such as shares, bonds, currencies and commodities. Futures can be used by traders to profit from market movements or for risk management (hedging).

Contracts for Difference (CFDs)

A CFD is an agreement between a buyer and a seller to exchange the difference in value of an underlying instrument between the point where the contract is opened, and the point it's closed. Like futures and options, CFDs can be traded over a range of markets, and can be used to profit from market movements or for risk management (hedging).

Things you should know

The information on this website has been prepared without taking account of your objectives, financial situation or needs. Because of this, you should consider its appropriateness, having regard to your objectives, financial situation and needs and, if necessary, seek appropriate professional advice. If a Product Disclosure Statement is available in relation to a particular financial product, you should obtain and consider that Product Disclosure Statement before making any decisions about whether to acquire the financial product. The information contained on this website does not constitute the provision of advice or constitute or form part of any offer, solicitation or invitation to subscribe for or purchase any securities or other financial product nor shall it form part of it or form the basis of or be relied upon in connection with any contract or commitment whatsoever. Any securities or prices used in the examples on this website are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not a reliable indicator of future performance. This website may contain material provided directly by third parties. This information is given in good faith and has been derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group nor any of their related entities, employees or directors (together, "Westpac"), nor the Participant, accepts responsibility for the accuracy or completeness of, or endorses any such material. This website may also contain links to external websites. Westpac and the Participant do not accept responsibility for, or endorse the content of, such external websites. Except where contrary to law, Westpac and the Participant intend by this notice to exclude liability for material provided directly by third parties and the content of external websites.